Easy Tips to Avoid Bankruptcy

Written by on September 29, 2012 in Money - 1 Comment | Print this page

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Filing for bankruptcy can be devastating. Not only does bankruptcy cause a great deal of anxiety, it impacts credit reports for up to 10 years. Before consulting a bankruptcy trustee, consider these simple suggestions for long term financial independence.

Settle With Creditors

Bankruptcy may seem like the only option when swimming in a sea of debt; however, creditors are eager to settle with customers who are behind in payments. Settling creates a win-win situation for both parties. The creditor receives a portion of the debt owed, and the debtor is allowed to rebuild credit more rapidly without a bankruptcy notation on their credit report. Creditors will often settle for half the amount owed.

Consider Downsizing

The housing boom led many buyers to adjustable-rate mortgages, which caused payments to skyrocket after a few years. To avoid bankruptcy and foreclosure in this situation, it is often easier to do a short-term sale. Short-term sales return the property to the lien holder without the complexities that come with foreclosure. Short-term sales will still affect a credit report negatively, but not as harshly as foreclosure. Although giving up the homestead is a difficult decision, those who file for Chapter 7 bankruptcy are still responsible for payments on vehicles or houses they choose to keep. Consider a home that will not overwhelm you with payments.

Create A Budget

Making a reasonable budget is the most important factor in avoiding bankruptcy. Items that seem necessary are often luxuries that we undervalue. The most commonly used example is the daily latte. Spending $3 on a latte every day is enough money to cover a utility bill for many homeowners.

Look for ways to replace expendable items like cable television. There are inexpensive movie services that also offer television series on demand. These services are usually accessible through a router and a game station. Packages start at less than $10 a month.

Use coupons and look for discounts on popular daily deal websites. Families can easily save 50 percent on family outings by purchasing deals online. Rather than canceling your newspaper subscription, start clipping manufacturer’s coupons for grocery store purchases. Some stores double or triple the face value of manufacturer’s coupons. Saving money is key to paying off creditors and staying within a budget.

Explore Additional Income Opportunities

There are legitimate work-at-home opportunities for those who seek them. Many tax preparation companies seek individuals to work at home from January to April. Lawn services are a great way to make money and get fresh air. Those who are crafty or enjoy sewing can create storefronts on popular auction websites. Consider your talents, and then look for ways to make additional income.

Conclusion

Filing for bankruptcy should be a last resort for those struggling with finances. Taking a few simple steps toward financial independence can save your family from a decade of heartache. For additional questions about avoiding bankruptcy, contact a bankruptcy trustee. Many free consumer services and classes are available to those searching for money management tools.

This is a guest post.  This article was wriiten by Marc Winters, an expert in personal finance. He strongly recommends the services of André Gabbay et Associés Inc. when you need help with your financial situation.

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